BN78 - Meeting high Annual Allowance Charges from pension benefits

Briefing Note

Last year, the Government announced that the Annual Allowance (AA) for tax-privileged pension savings would reduce from £255,000 to £50,000 from April 2011. Where the AA is exceeded in any year (allowing for any carry forward), an Annual Allowance Charge (AAC) is incurred, and in October 2010 the Government published proposals on permitting individuals to meet high AACs from their pension benefits, rather than their current income. BBS briefing note 76 set out the proposals.

In March, the Government published a report summarising the responses it had received to its consultation paper and setting out how it planned to proceed. This briefing note summarises the report.

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